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What's the Outlook for Novocure?

By Keith Speights and Brian Orelli, PhD – Nov 13, 2021 at 6:04AM

Key Points

  • Novocure's sales for its tumor treating fields have stalled in the glioblastoma indication.
  • The company's next big opportunity is in lung cancer, with clinical results on the way in 2022.

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There's a lot riding on clinical studies of the company's tumor treating fields product.

Novocure (NVCR -0.18%) has taken investors on a roller-coaster ride in 2021. Its shares had soared nearly 30% year-to-date at one point, but are now down close to 40%. In this Motley Fool Live video recorded on Nov. 3, 2021, Motley Fool contributors Keith Speights and Brian Orelli discuss the company's outlook.

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Keith Speights: Brian, let's switch to questions in our last couple of minutes here. I'm going to go to a question that Matthew poses. He asked about Novocure (NVCR -0.18%) and I know you have recently talked about Novocure's earnings results. What's your take on Novocure right now? Ticker there is NVCR, right?

Brian Orelli: If you want to get a little bit more detail, it was Monday's episode of Beat and Race. If you look there during that hour long thing you can fast forward, I was on it three times, but one of them is Novocure, I believe it was the first one.

But Novocure is selling a device that creates tumor treating fields and that can stop tumors. Basically, the issue right now with the stock price is then it's gone down substantially from its 52 week high, is that the company is maxed out in glioblastoma. It's only approved in glioblastoma and mesothelioma, and mesothelioma is really small.

Basically, almost all the sales are from glioblastoma. It's got about 40 percent penetration and they've stalled. I think that sales were only up four percent. Revenue was three or four percent and maybe they got one percent more prescriptions or something.

I think that the issue is they have to do something in glioblastoma or it's going to trade sideways. What investors should really be focused on is the lung cancer clinical trial, which I believe will read out next year, if I'm not mistaken. After that, there's ovarian cancer and both of those are much, much larger markets than glioblastoma.

I'm a shareholder and I'm basically just holding on. If they get more sales in glioblastoma, that's great in the short term and the share price will go up in the short term. But in the long term results from the lung cancer study, which we think is probably going to be positive based on comments that the data monitoring committee made. That showed that they can enroll less patients probably and still show that the device is helping people.

That gives me pretty good confidence that it's going to work in lung cancer. That's a huge market and then it won't really matter whether they have 40 percent penetration in glioblastoma or 60 or 70 percent because the sales of the device for lung cancer will be so much higher.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Novocure. The Motley Fool has a disclosure policy.

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